HALISTER1: Enter Gilt 5s20s Flattener After Similar EUR, UST Trades: BofAML

Enter Gilt 5s20s Flattener After Similar EUR, UST Trades: BofAML

(Bloomberg) -- After favoring flatteners in EUR and U.S. curves, BofAML now recommends 5s20s gilt flatteners, strategists including Mark Capleton write in client note.
  • Flattening is a global theme, with the longer end supported by scarcity of positive-yielding, safer assets in bond markets
  • “Remain” vote in U.K.’s EU referendum looking increasingly likely according to polls; should also benefit the trade
  • DMO has front-loaded issuance, leaving almost a third of net supply in 15Y+ completed just two months into fiscal year
  • Coupon payments from long-end in June, July will see GBP3.5b repaid to private holders
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Mark Capleton (Merrill Lynch International)

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